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Technology

The government’s Facebook trustbusting is a zealous takedown that harms consumers and punishes innovation

WASHINGTON, D.C — On Wednesday, the Federal Trade Commission issued its long-awaited lawsuit, in conjunction with attorneys general from 46 states, that aims to force Facebook to break up its popular services WhatsApp and Instagram for alleged “anticompetitive” behavior.

Yaël Ossowski, deputy director of the Consumer Choice Center, a millennial consumer advocacy group based in Washington, D.C., said the FTC’s lawsuit does more to actively harm consumers than help.

“The actions by agencies of our federal and state governments to try to dismantle Facebook’s legal business acquisitions after-the-fact are woefully misguided and will end up harming consumers,” said Ossowski. “These are free services offered to consumers in a competitive marketplace that boasts hundreds of social apps for messaging, photo sharing, and social networking.”

The social media platform lawfully purchased Instagram for $1 billion in 2012, and also bought WhatsApp for $19 billion in 2014, offering both cash and stock options for its founders.

Both services were acquired and already greenlit by the FTC, and have achieved inordinate amounts of success and user growth since.

“In terms of social messaging users, WhatsApp is dwarfed by Facebook’s own Messenger and even Snapchat in the United States. And that’s not even considering the nearly 200 million iPhone US users who predominately use iMessage, or the nearly 100% of cell phone users who use traditional SMS,” said Ossowski.

“Instagram was a risky investment in 2012, and has grown to become successful because of Facebook’s own innovation and algorithms. Small businesses and entrepreneurs benefit from these platforms because they can reach customers and consumers love them for their ability to share pictures and videos with friends and family,” said Ossowski.

“This amounts to nothing more than a zealous takedown of American innovation by the political and legal class. If the FTC is successful, it would empower and embolden foreign companies far from the reach of our laws and institutions at the expense of our own tech sector.

“Let’s be clear: The internet is the ultimate playground for consumer choice. Government attempts to intervene and regulate based on political considerations will only restrict consumer choice and deprive us of what we’ve thus far enjoyed,” said Ossowski.

“Rather than speaking for consumers, the federal government and attorneys general are willingly quashing their preferences and choice. That is a much more powerful monopoly than any social media platform could ever hope to achieve,” said Ossowski.

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The Consumer Choice Center represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Washington, Ottawa, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice.

Learn more at consumerchoicecenter.org

Stopping targeted advertising cuts off industries and dumbs down tech

The European Parliament’s vote to phase out the practice threatens to reduce consumer choice and stifle what is one of Europe’s most innovative sectors, writes the Consumer Choice Center’s Yaël Ossowski.

hen we hear gripes about social media, one of the top concerns is targeted advertising.

On any given day, this type of segmented advertising is used by the local hair salon searching for new clients, an environmental group asking for signatures on a petition, and a political candidate seeking your vote. These are all important and vital for our civil societies in Europe.

These groups pay to get your attention on social media because it achieves something essential: to generate business, to advocate for social causes, or win elections. This is facilitated by the unique platforms where we post and share information.

And because social media is usually free, accepting this advertising allows platforms to grow and scale to continue providing value to users. That is the balance that most of us understand. Some people are mildly annoyed, but others prefer advertising that caters to their interests.

Unfortunately, that distinction has given fodder to activists and politicians who want to ban this style of advertising to limit the ability to spread information on social media.

In October, MEPs in the European Parliament voted overwhelmingly in favour of severely restricting and eventually phasing out targeted ads. The proposal was an amendment to the annual competition report, aimed at overhauling the Digital Services Act. It remains non-binding until such regulation is issued by the European Commission.

Using his Twitter account, Dutch MEP Paul Tang categorised the vote as a “win” against large tech companies, further adding that “We see that big tech continues to expand their market power by considering personal data as a commodity. In addition to interfering with our privacy, such a revenue model is unhealthy and sickening for the internet.”

In this case, politicians in Brussels get it wrong. These policy remedies would end up being harmful to both consumers and small businesses, and dumb down the greatly innovative tech sector that provides value to users across Europe.

Social media platforms have grown to be popular because they empower users to speak their minds and profitable because they enable small businesses and groups to find current and future customers. That is a win-win for our societies.

If targeted advertising is dismantled online as some hope, it would severely restrict the options for entrepreneurs and social groups to find supporters and clients. That may sound good in theory, but in practice, it means stopping advertising options for environmental groups, restaurants hoping to deliver food during continued lockdowns, and more.

Regulating innovative technology because of serious legal and health concerns is warranted but stopping information and unique algorithms that give us what we want is a step too far.

We must face the fact that social media has become the new marketplace where we seek information. If we legislate and ban specific methods of sharing information on products and services online, this reduces consumer choice and chokes off entire industries. This harms everyone.

“If we legislate and ban specific methods of sharing information on products and services online, this reduces consumer choice and chokes off entire industries. This harms everyone”

More than harmful, it is also based on the false assumption that adults are not intelligent enough to understand or interpret advertising. This is both paternalistic and wrong.

Of course, ads are annoying for those who do not want them. And, luckily, the same technology that created targeted micro-advertising has also spawned ad-blocking browser plugins, Virtual Private Networks, and private browsing modes that are simple and easy to use for those who want them.

Thanks to technology, everything we do online has gotten more efficient, more effective, and less costly. It has empowered non-profits like mine, given a voice to millions of entrepreneurs, and offered untold value to users around the world.

As advocates for a free and open Internet, we must continue to uphold innovation and ensure it is protected from those that wish to limit its potential. The European Union needs to find ways to foster, rather than choke off, the innovation that every citizen on the continent deserves.

Originally published here.

Halting targeted advertising kills industries and dumbs down tech

When we hear gripes about social media, one of the top concerns is targeted advertising.

On any given day, this type of segmented advertising is used by the local hair salon searching for new clients, an environmental group asking for signatures on a petition and a city council candidate seeking your vote. These are all important and vital for our civil society.

These groups pay to get your attention on social media because it achieves something essential: to generate business, to advocate for social causes or win elections. This is facilitated by the unique platforms where we post and share information.

And because social media is usually free, accepting this advertising allows platforms to grow and scale to continue providing value to users. That is the balance that most of us understand. Some people are mildly annoyed, but others prefer advertising that caters to their interests.

Unfortunately, that distinction has given fodder to activists and politicians who want to ban this style of advertising to limit the ability to spread information on social media.

The latest scandal du jour, as one can guess, revolves around the 2020 elections and how political forces targeted would-be voters on social media.

Using Twitter and Facebook proved effective for both the Biden and Trump campaigns, up until both platforms halted political advertising. Hundreds of millions of dollars were spent and tens of millions of voters were reached.

In a hearing on Tuesday, senators on the Judiciary Committee excoriated Twitter CEO Jack Dorsey and Facebook CEO Mark Zuckerberg for their proprietary algorithms that drive engagement and sell ads.

Senators took turns grinding their axes, lodging complaints about content moderation, targeted advertising and market power.

The policy remedies discussed have so far been two-pronged, either using antitrust laws to break up the social media firms or rewriting Section 230 of the Communications Decency Act that currently treats online outlets as platforms rather than publishers, not making them liable for the content shared on their pages.

In either case, politicians in Washington get it wrong.

Action in either direction would end up being harmful to both consumers and small businesses, and dumb down the great innovative tech sector that is the world’s envy.

Social media platforms have grown to be popular because they empower users to speak their minds and be profitable because they enable small businesses and groups to find current and future customers. That is a win-win for society.

If targeted advertising is dismantled online as some hope, it would severely restrict the options for entrepreneurs and social groups to find supporters and clients.

That may sound good in theory, but in practice it means stopping advertising options for environmental groups, restaurants hoping to deliver food during continued lockdowns and more.

Regulating innovative technology because of serious legal and health concerns is warranted but stopping information and unique algorithms that give us what we want is a step too far.

We must face the fact that social media has become the new marketplace where we seek information. If we legislate and ban specific methods of sharing information on products and services online, this reduces consumer choice and chokes off entire industries.

This harms everyone.

More than harmful, it is also based on the false assumption that adults are not intelligent enough to understand or interpret advertising. This is both paternalistic and wrong.

Of course, ads are annoying for those who do not want them. And, luckily, the same technology that created targeted micro-advertising has also spawned ad-blocking browser plugins, Virtual Private Networks, and private browsing modes that are simple and easy to use for those who want them.

Thanks to technology, everything we do online has gotten more efficient, more effective and less costly. It has empowered nonprofits like mine, given a voice to millions of entrepreneurs and offered untold value to users around the world.

As advocates for a free and open internet, we must continue to uphold innovation and ensure it is protected from those who wish to limit its potential.

Originally published here.

Why Europe needs radical digital reform

EU attempts to curtail the influence of the world’s digital giants are stymying innovation, argues the Consumer Choice Center’s Maria Chaplia.

Amazon will soon face antitrust proceedings to address concerns raised by EU authorities regarding the company’s access and use of data. Specifically, they claim the American company can see sensitive commercial information on third-party products such as price or volume. Amazon’s actions would qualify as anti-competitive if the EU finds that it has been using this data to improve the ranking of its own products.

Regardless of the outcome of this investigation into abusive, monopolistic behaviour, the EU will come out as a loser if it does not undertake a radical digital reform to liberalise its digital single market. In the face of digital competitors from abroad, it has become convenient to pull out antitrust laws in response to every tech issue. But such an approach has neither made the EU more innovation-friendly nor more mindful of actual consumer needs.

Instead of letting digital services of all types develop at their own pace, the EU has relegated itself to passing legislation that is far from technology-neutral. According to EU Competition Commissioner Margrethe Vestager, the EU’s current regulations were put in place “when no one could have foreseen the situation we’re in today, that platforms would not just be channels, but full ecosystems where a lot of what is ongoing is monetised by the platform itself.” There was, of course, no way to predict what has happened, but it’s a poor justification for the EU’s digital lag.

Regulators, though with noble intentions, are simply unable to know ahead of time how far innovation can and will go. What they can do, instead, is create and sustain a framework that does not pick winners and losers, but safeguards intellectual property rights, keeps taxation low to encourage returns, limits barriers to entry, and makes investment easy.

In Europe, there are many outdated laws that make it burdensome to create new and innovative digital services before they ever hit the market. One example is the lack of a European-wide license for audiovisual services, forcing service providers to apply in every Member State if they want to show their content. It is the same for most other digital services in the EU, including music streaming or news collection.

“If the EU succumbs once more to antitrust legislation, it will come at the expense of future innovation and risk cutting off millions of European consumers from vital digital services”

Another key issue concerns taxation. The EU has long considered levying a tax of between two and six percent on the local revenues of platform giants. The prospect of trade talks with the US has brought this topic back into the spotlight. However, an EU-wide digital tax would limit potential future innovation. Innovators should be able to choose between high-taxed and low-taxed locations, not be faced with a uniform unavoidable tax. Complicated issues – such as the EU’s digital lag – require complex solutions according to officials, but that’s not the case. Less intervention means more innovation. Antitrust lawsuits and actions are a great tool for tax collecting but they don’t solve the core problem. We need a digital market that has many different options to choose from, making it less likely that one company can gain a monopoly as it will be more preoccupied with actual competition, and thus seek to come up with innovative solutions for consumers.

If the EU engages once more in antitrust proceedings, it will come at the expense of future innovation and risk cutting off millions of European consumers from vital digital services. We need reform and liberalisation in order to better provide for both consumers and producers.

Originally published here.

How Not to Respond to Alarming Social Media Censorship

Protecting a free and open internet means not using punitive regulations or policies to hamstring social networks because of the scandal of the day.

Call it election interference, censorship, or simple editorializing, but Twitter and Facebook’s throttling of several New York Post articles this week has drawn lots of criticism.

The stories allege that Hunter Biden, former Vice President Joe Biden’s son, introduced Ukrainian energy adviser Vadym Pozharskyi to his father after receiving a cushy $50,000 a month board seat at the company Burisma. (Other outlets have contested the report).

There is no question that the social networks in question made a bad call. Disabling the link on the various platforms made even more people seek it out, creating a “Streisand Effect” of mass proportions.

But the content of the articles isn’t what really matters.

The reaction to the New York Post report reveals just how much pressure is put on social networks to perform roles far beyond what they were intended for. We want them to simultaneously police speech online, keep the networks free for open discussion, and be mindful of “fake news” that spreads rapidly.

So, it is important to understand why Facebook and Twitter felt they had to censor the story in the first place—and why all of us are actually to blame. For the last several years, campaigners, activists, and politicians have primed us all to accept the byzantine expectations and regulations put on social networks.

From Netflix documentaries such as The Social Dilemma and The Great Hack to the criticisms of “surveillance capitalism,” many voices are calling for further regulation of social media networks.

Some on the Right smirk as Sen. Josh Hawley pens legislation to repeal Section 230 of the Communications Decency Act or to ban “infinite scrolling” on social media apps. Meanwhile, some on the Left cheer as technology CEOs are dragged before congressional committees and castigated for “allowing” Trump to win in 2016. 

This week, it was revealed that the New York State Department of Financial Services wants a “dedicated regulator” to oversee social media platforms. Other states will likely follow suit.

But what we’re all too loath to admit is that these firms do what any of us would do when under scrutiny: they pivot, they engage in damage control, and they aim to please those with pitchforks outside their doors. It’s the same whether it’s Black Lives Matter or President Trump.

Facebook has committed to ending all political advertising online (hurting non-profit advocacy groups like mine) and Twitter already implemented a similar policy last year, lauded by political figures such as Hillary Clinton and Andrew Yang.

Of course, when tech giants censor or delete stories that we perceive to advance or hurt our political “team,” we are all up in arms. But protecting a free and open internet means not using punitive regulations or policies to hamstring social networks because of the scandal of the day.

Internet policy remedies dreamed up in Washington, D.C. will almost always end up hurting those of us who don’t have power or deep pockets. It harms the small businesses that use social networks for advertising, and it sets up more roadblocks for ordinary users who simply want to check in with friends and family. 

Big Tech isn’t powerful because it has money, but because it has delivered superior products, those that have left platforms such as AOL, Myspace, and Yahoo in their wake.

Social networks have evolved from places to connect and share information across borders to intellectual and political battlefields where we wage digital wars.

Of course, there should be regulation in some respect. But it should be smart regulation that keeps platforms relatively free and open and provides incentives for future innovation. The powerful platforms of today can afford to comply with cumbersome rules, while new market entrants cannot. 

That means that with every new proposal to roll back Section 230 protections or require quasi-governmental fact-checking functions around Election Day, we’re depriving consumers of choice and entrepreneurs of the ability to innovate.

Of course, targeted censorship of certain accounts or stories on social media networks is bad. But policy “solutions” dreamed up by technologically illiterate bureaucrats and power-hungry politicians would no doubt be even worse. 

Originally published here.

Western Standard

Ottawa is getting ready to meddle in your newsfeed and streaming services

David Clement writes about Ottawa’s plan for draconian new regulation of your newsfeed, social media, and even Netflix.

Heritage Minister Steven Guilbeault announced last week the Trudeau government wants to enforce Canadian content regulations for platforms like Spotify and Netflix, and is looking at Australian-style regulations requiring platforms like Facebook to compensate news outlets whenever a news outlet’s link is shared there.

Both of these proposed regulations are silly.

For Canadian content, the Trudeau government seems hell-bent on applying outdated regulations to innovative tech platforms like Netflix and Spotify. These platforms are successful because they provide consumers what they want in terms of video and audio content. It seems quite paternalistic for the government to interfere, and require that these companies produce Canadian content, regardless of whether there is consumer demand for it.

This is problematic because CanCon regulations forcibly tell consumers that they want, or are required, to consume Canadian content, and then force companies to create content based on that false assumption. I, of course, want Canadian artists and content creators to do well and thrive, but I also know that the Canadian media/entertainment space is mature enough to stand on its own two feet. It would be better for Canadian success to be a result of meeting consumer demands and not the result of a government decree. 

Supporters of CanCon regulations say these regulations are required to “protect Canadian culture and the people who produce it”, but who exactly are we protecting Canadian culture and its producers from? If Canadian content isn’t successful in the domestic market, that is because it isn’t appealing to the demands and wants of Canadian consumers. It is backwards for the government to meddle to try and shield Canadian creators from the wants of domestic consumers.

If legislators want to actually listen to the demands of Canadian consumers, they’d know that Canadians like Netflix and Spotify just how they are, and that intervention isn’t needed. Plus, we already have a taxpayer funded outlet to protect Canadian culture and its creators: the CBC. Is the $1 billion the CBC receives not enough to provide a home for Canadian content? Do we really need to be forced to pay for Canadian content as both taxpayers, and in the private sector? I don’t think so.

Beyond content, the heritage minister’s comments regarding social media platforms having to pay news outlets to share web links are just as misguided. In an interview with Radio-Canada, Minister Guilbeault suggested that Canada is looking at following Australia’s lead, and creating regulations that would force a platform like Facebook to pay news outlets every time one of their web links is shared. That means that when you or I share an article, let’s say from the Toronto Star, Minister Guilbeault thinks that Facebook should be forced to compensate the Star, despite the fact that Facebook is acting as a free lead generator. This genuinely leaves me scratching my head as to why this is a good idea. Media outlets make their money in two ways: advertising dollars linked to views or through subscriptions. Being able to freely share a news story on social media drives traffic to these news outlets, which is exactly how they make their advertising money and solicit subscribers. 

It is bizarre for the federal government to mandate that Facebook compensate newspapers for driving web traffic to their website and sending them free leads. This desire to have the government further protect the media industry becomes even more strange when you consider that the industry is already subsidized by taxpayers at the tune of $600 million dollars.

And if Australia has shown us anything, following through with this type of legislation would be disastrous for consumers, for newspapers, and for society at large. In response to the regulations down under, Facebook stopped allowing for users to share news links on their platform. 

This hurts consumers because it means that news won’t be available on social media at all, where most of us consume it. This is a net negative for society because less news availability ultimately means poor media literacy, which certainly isn’t good. And lastly, this is terrible for newspapers because it eliminates their ability to reach online audiences via social media, which reduces traffic and their ability to generate subscribers.

Rather than enforce outdated regulations on Netflix and Spotify, legislators should listen to Canadian consumers. In regards to the offer of additional regulations, with all due respect Minister Guilbeault, thanks, but no thanks.

David Clement is a columnist for the Western Standard and the North American Affairs Manager with the Consumer Choice Center

Originally published here.

Consumer Choice Center Signs Joint Letter to Senate Judiciary Committee on Antitrust Hearings

September 15, 2020
The full letter can be downloaded here

The Honorable Michael S. Lee
Chairman, Senate Committee on the Judiciary
Subcommittee on Antitrust, Competition Policy and Consumer Rights

The Honorable Amy Klobuchar
Ranking Member, Senate Committee on the Judiciary
Subcommittee on Antitrust, Competition Policy and Consumer Rights

Dear Chairman Lee and Ranking Member Klobuchar,

We, the undersigned, write today to provide you with a statement for inclusion in the record of the Subcommittee’s September 15th hearing, “Stacking the Tech: Has Google Harmed Competition in Online Advertising?”[1] We are a group of legal experts, economists, and consumer and taxpayer advocates who believe in the importance of promoting competitive markets and defending the rule of law.

We believe that weaponizing antitrust for broader socio-economic purposes would fundamentally alter the primary goal of antitrust and seek to address the increasing calls to move away from the consumer welfare standard[2] and to use antitrust as a tool for unrelated concerns.[3] While signatories herein may prefer various approaches for addressing non-competition concerns about issues such as privacy, online content, liability, and myriad other popular topics associated with technology firms, we uniformly agree that any congressional assessment of issues related to digital markets must be characterized by rigorous economic analysis, productive in promoting competition and consumer welfare, and based on predictable and enforceable standards.

As discussions about antitrust law enter mainstream discourse, we thank the Subcommittee for the opportunity to provide a statement for inclusion in the record, and for providing an appropriate forum specifically dedicated to the discussion of antitrust concerns.

PUTTING RECENT PROPOSALS INTO PERSPECTIVE

Before addressing the specific topic of today’s hearing, we find it critical to make note of the economic consequences of many of the recent proposals to revise antitrust law, which seriously risk making the American economy and consumers substantially worse off across a wide array of industries. Many discussions around antitrust have centered on large, successful American technology companies, and the House Judiciary Committee has launched an investigation and we expect to see certain proposals come out of that investigation. However, the implications of today’s antitrust debate extend far beyond just “Big Tech.”

These proposals — which are likely to materialize within the days or weeks following today’s hearing —include aggressive merger prohibitions, inverting the burden of proof, allowing collusion and antitrust exemptions for politically favored firms, and politicizing antitrust enforcement decision-making more generally. Additionally, arbitrary or overly broad antitrust enforcement would hamper economic recovery and risks job losses as the nation recovers from the economic slow-down, evolving market dynamics, and changing consumer needs resulting from the global pandemic.

I.            The Current State of the Antitrust Debate

We fear that both sides of the aisle are pushing for the weaponization of antitrust, either as a tool to punish corporate actors with whom they disagree or out of a presupposition that big is bad. Unfortunately, the antitrust debate has begun to devolve into a litany of unrelated and often contradictory concerns, unsubstantiated and dismissive attacks, and seemingly a presumption that any market-related complaint that can be made on the internet can also be cured by the panacea of antitrust. This highly charged atmosphere has led to radical proposals that run contrary to economic evidence and endanger significant advances made in antitrust scholarship.

The Senate Committee on the Judiciary — and specifically this Subcommittee — has an important role to play. While there are many issues plaguing our society today, we believe that this Committee is equipped to examine antitrust soberly and without misdirection from legitimate anger over other issues which antitrust is not designed to address.

CONSIDERATIONS FOR FURTHER INQUIRY

II.            The Law: New Technology, Same Principles  

a.      The consumer welfare standard has greatly benefited antitrust and is underrecognized as a significant narrowing of federal government power in the last half century and a major victory for the movement to preserve the rule of law.

It is important to consider what is at stake. Using antitrust to achieve policy or political goals would upend more than a century of legal and economic learning and progress. The need to bring coherency to antitrust law through a neutral underlying principle that cannot be weaponized is what led to the adoption of the modern consumer welfare standard. It is broad enough to incorporate a wide variety of evidence and shifting economic circumstances but also clear and objective enough to prevent being subjected to the beliefs of courts and enforcers.[4]

Therefore, we would like to stress the need to distinguish between the proper and improper uses of antitrust in approaching discussions of market power, and are concerned that today’s hearing could lead to the use of antitrust to address concerns surrounding online content moderation, data privacy, equality, or other socio-political issues that are unrelated to the competitive process. Weaponizing antitrust for broader socioeconomic purposes would fundamentally alter the primary goal of antitrust, undermine the rule of law, and negatively impact consumers.

I.            The Role of Presumptions

b.      Approaches to antitrust enforcement based on presumptions of anticompetitive harm drastically upend core tenants of our legal system by inverting the burden of proof and diminishing the role of the federal judiciary.

Returning to the highly interventionist pre-1970s antitrust jurisprudence through burden shifting provisions that would require a company to prove it is not a monopoly would create greater incentives for the government and private plaintiffs to file suit. More importantly, however, these reforms are not needed because current antitrust law has adequate power to intervene and claims of lax antitrust enforcement are demonstrably false. The FTC and the DOJ have only lost a handful of cases in the last decade, and private litigants continue to bring monopolization claims. Outside of the courtroom, multitudes of mergers and anticompetitive actions are prevented out of fear of government action.

II.            The Market: Questions of Concentration and Definitions

c.       Digital platform markets are not traditional linear markets. They are two-sided markets and competition typically turns on non-price factors.

One of the most important questions to address in this discussion is that of market definition. Importantly, digital advertising is not a traditional, linear market. It is a two-sided market in which advertisers try to influence the online behavior of consumers through an intermediary.[5] Traditionally, market definition is framed around a static product with a distinct type of customer. With advances in technology, this build-and-freeze model breaks down as advertising platforms evolve.

However, as Ronald Coase pointed out: [I]f an economist finds something – a business practice of one sort or other – that he does not understand, he looks for a monopoly explanation. And as in this field we are rather ignorant, the number of ununderstandable practices tends to be rather large, and the reliance on monopoly explanations frequent.[6] Indeed, when it comes to the innovative business model that has engulfed digital advertising, regulators are struggling to apply the correct regulatory framework.

d.      The relationship between concentration and competition in the market is tenuous, and structural changes in the economy have resulted from increased competition.

A positive correlation between high market concentration and profitability does not indicate monopolistic practices, and the underlying drive for commercial success can simultaneously enhance pro-consumer efficiencies.[7] In other words, concentration alone does not indicate lack of competition, as firms capture a larger slice of the market through higher productivity and innovation.[8] Some critics argue that systematic anticompetitive conduct is inherent in the digital advertising model, or that the rapid growth or dominance of these platforms allow them to exist entirely insulated from competitive market forces.

As then-Judge Clarence Thomas wrote in U.S. v. Baker Hughes, “[e]vidence of market concentration simply provides a convenient starting point for a broader inquiry into future competitiveness.”[9]It is a step in the right direction to for today’s hearing to analyze the exercise of market power, but it is critical to determine whether the power of the market is being used to benefit or harm not the competitor, but instead the consumer. That is the relevant inquiry.

CONCLUSION

As Robert Bork pointed out, “[a]dvertising and promotion are particular obsessions of antitrust zealots.”[10]

We encourage the Committee to continue in this effort and to reclaim this debate from the politicized approach that seeks to transform our antitrust laws and refocus the conversation on enforcement, market analysis, and the core purpose of antitrust.

We thank you for your oversight of this important issue and ask that this letter be included on the Committee or Subcommittee’s website and repository. Please feel free to contact us should you have any questions or requests for additional input from signatories. We welcome the opportunity to further discuss these views and relevant proposals or congressional assessment with the Committee.

Sincerely,

[1] See Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google. Hearing Before the House Committee on the Judiciary, Subcommittee on Antitrust, Commercial, and Administrative Law, 116th Cong, (July 29, 2020), available at: https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=3113

[2] See Robert H. Bork, “The Antitrust Paradox: A Policy At War With Itself” (1978).

[3] See, e.g. Douglas H. Ginsburg, Originalism and Economic Analysis: Two Case Studies of Consistency and Coherence in Supreme Court Decision Making, 33 Harvard Journal of Law and Public Policy. (217–18) (2010) (discusses political goals read into the Sherman Act by the Supreme Court).

[4] Shifting away from the consumer welfare standard would catapult antitrust law back to the era of the 1960s when, in Justice Potter Stewart’s words, “[t]he sole consistency that I can find is that, in litigation under [the antitrust laws], the Government always wins.” United States v. Von’s Grocery Co., 384 U.S. 270, 301 (1966) (Stewart, J., dissenting).

[5] See, e.g. Ashley Baker, Comments Submitted to the DOJ Antitrust Division Regarding Competition in Television and Digital Advertising. (June 2019), available at: http://bit.ly/2PwehnJ.  

[6] Coase, R.H. “Industrial Organization: A Proposal for Research. Policy Issues and Research Opportunities in Industrial Organization.” (p. 67). (Victor R. Fuchs ed.) (1972).

[7] Harold Demsetz, Industry Structure, Market Rivalry, and Public Policy, 16 Journal of Law & Economics

(April 1973), 1-8.

[8] See David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen. “Concentrating on the Fall of the Labor Share.” American Economic Review, 107 (5): 180-85 (2017).

[9] See U.S. v. Baker Hughes

[10] See Robert H. Bork, “The Antitrust Paradox: A Policy At War With Itself” (p. 314) (1978).
Organizations listed for identification purposes only.


Sincerely,
Ashley Baker
Director of Public Policy
The Committee for Justice


Robert H. Bork, Jr.
President
The Bork Foundation


Wayne Brough
President
Innovation Defense Foundation


James Czerniawski
Tech and Innovation Policy Analyst
Libertas Institute


Richard A. Epstein
The Laurence A. Tisch Professor of Law,
New York University School of Law
The Peter and Kirsten Bedford Senior
Fellow, The Hoover Institution
The James Parker Hall Distinguished
Service Professor of Law Emeritus and
Senior Lecturer, The University of Chicago


Tom Giovanetti
President
Institute for Policy Innovation


Katie McAuliffe
Executive Director
Digital Liberty


Doug McCullough
Director
Lone Star Policy Institute


Grover G. Norquist
President
Americans for Tax Reform


Curt Levey
President
The Committee for Justice


Yaël Ossowski
Deputy Director
Consumer Choice Center


Eric Peterson
Director of Policy
Pelican Institute


Thomas A. Schatz
President
Council for Citizens Against Government
Waste


Timothy Sandefur
Vice President for Litigation
Goldwater Institute


Pete Sepp
President
National Taxpayers Union


David Williams
President
Taxpayers Protection Alliance


Josh Withrow
Senior Policy Analyst
FreedomWorks

Argentina’s telecom price controls are economic masochism

Last week, in a bid to ensure unrestricted access for everyone to telecommunication services, the Argentinian government decided to extend a price freeze for TV, internet and mobile services until the end of the year, deeming them “essential public services”.

Prices on these services have been frozen since May, and it was expected that the ban would be lifted at the end of this month.

In response, Luca Bertoletti, Senior European Affairs Manager at the Consumer Choice Center, criticises the move saying that such a policy was populist and economically illiterate, and will destroy Argentina’s relationship with the International Monetary Fund who has been supportive of the country’s – though unsuccessful so far – road to prosperity.

“The Covid-19 crisis has overburdened most economies in the world and Argentina is no different. In order to help the economy get back on track, the Argentinian government will finally need to implement pro-free market reforms instead of holding onto socialist policies such as price controls on telecom services,” said Maria Chaplia, European Affairs Associate at the Consumer Choice Center.

“Argentina’s government should pull itself together and start making the right decisions, instead of pushing the country further down. Argentina deserves better than a populist government that pretends to act in the interests of consumers by extending price controls of TV, internet and mobile services at the expense of future prosperity,” concluded Bertoletti.

Originally published here.

Consumer Choice Center blasts potential Russian plan to force Apple to cut App Store commissions

Fedot Tumusov, a member of the Russian State Duma, has proposed a law that would force Apple to cut app store commission fees down from 30% to 20%. The law would require that a third of the app store commission be paid to the Russian government as part of a fund to train IT specialists.

In response, Luca Bertoletti, senior European affairs manager at the Consumer Choice Center (a “global grassroots movement for consumer choice”), said the Russian government’s policy would be a significant step back towards the socialist economy that would discourage competition, and, in the end, drive Apple out of Russia thereby hurting Russian consumers.

Read more here

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How price controls in Argentina could have far-reaching consequences

Last week, in a bid to ensure unrestricted access for everyone to telecommunication services, the Argentinian government decided to extend a price freeze for TV, internet and mobile services until the end of the year, deeming them “essential public services”. Prices on these services have been frozen since May, and it was expected that the ban would be lifted at the end of this month.

Banning telecommunications companies from raising prices might seem like a sensible policy, but the opposite is true. Price controls are a disastrous and irresponsible economic policy that only leads to a shortage of supply, thereby depriving consumers of choice, driving once-successful companies out of the market and reducing the quality of services provided.

The Covid-19 crisis has overburdened most economies in the world and Argentina is no different. The road to economic recovery will require a lot of investment that necessitates the need for legislative certainty. Latin American companies often have to resort to external financing and when unprecedented risks arise – such as price controls – the cost of financing goes up as well, according to Maryleana Mendez, general secretary of the Inter-American Association of Telecommunications Companies.

At first glance, the decision of the Argentinian government to extend price controls can be seen as the one that benefits consumers. The logic behind the said price controls is clear: to make sure that every Argentinian consumer – even those on low incomes – can enjoy TV, internet and mobile services.

While this approach stems from the noble motives, it is unfortunately doomed to fail and, in the end, companies will lose every incentive to operate in the market. If companies don’t have the freedom to set prices as they wish – keeping in mind their operational costs – what is the reason for them to carry on? One solution is to reduce the quality of their prices simply to keep afloat. Conversely, consumers who can afford to pay more are left out, and their demand cannot be met.

Argentina government’s meddling with the market forces is unacceptable and socialist ait its core, and will also worsen the country’s relationship with the International Monetary Fund. And while the government of President Alberto Fernandez (and his predecessors) has been widely distrustful of the IMF, Argentina is the IMF’s biggest client.

The country has received more than 20 financial aid programmes from the IMF since the late 1950s. Argentina constantly remains on the brink of collapse, so it’s high time the country took the path of economic liberalisation and started taking its relationship with the IMF more seriously instead of pulling off another harmful and populist intervention. Price controls are economic masochism.

Every consumer wants to have as many options to choose from as possible and to be able to reasonably balance out price and quality. If there is no one to provide these choices for them, everyone loses, especially in the long run. Similar to intellectual property rights, if companies don’t get protection for their inventions, there is little incentive for them to innovate.

The overregulation of the telecommunications industry is an expensive policy that will have a negative impact on Argentina’s investment climate in the future thereby hindering its economic recovery and destroying its relationship with the IMF. Argentina’s government should pull itself together and start making the right decisions, instead of pushing the country further down. Argentina deserves better than a populist government that pretends to act in the interests of consumers by extending price controls of TV, internet and mobile services at the expense of future prosperity.

Originally published here.

The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

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